Regarding the situation with Hanjin Shipping, we are sharing in our fifth update what we are experiencing specifically in Busan, Korea that impacts all of you.

Why is Busan so important in the TP trade? Busan is a major trans-shipment hub for Central and North China exports to the United States and imports from the United States. A significant portion of Korea GDP is from exports, and Busan was the funnel through which all those exports were shipped. Consequently, Korean carriers Hanjin and Hyundai always maintained a consistent flow of services calling Busan, and therefore used Busan as a major trans-shipment hub for their shipments throughout North Asia. And because of their alliance structures, the other carriers in those alliances also used Busan as a trans-shipment hub.

So with Hanjin’s bankruptcy, what’s happening? Without Hanjin effectively servicing Busan, the whole infrastructure built on trans-shipping in Busan is severely impacted. Containers are being deposited there and without Hanjin vessels to move them to the United States, they are effectively stuck. In addition, much of North China is serviced via Busan, and without the trans-shipment flow working, space and equipment supply in North China is becoming very tight.

Who’s impacted the most? Clearly, North China ports that rely almost exclusively on Busan are impacted the most (Qingdao, Xingang, Lianyungang, and Dalian). Secondary ports that also use Busan as a trans-shipment port (Shanghai and Ningbo) are also impacted.

What are other carriers doing? You will notice that all the extra loaders introduced over the next 3-4 weeks are calling Busan. This is for two reasons: 1). Revive the trans-shipment network so critical to North China and North Asia in general, and 2). To rescue off-loaded containers from Hanjin vessels in Busan and get them moving to their final destination.

How long will this impact North China? Some of the most acute space shortages are in North China. Until the flow through Busan improves, this situation will remain quite challenged. The extra loaders will certainly help medium-term but long term solutions might be more elusive. If Busan is going to continue its roll in North China as a trans-shipment hub, it will most likely be non-Korean carriers that ultimately provide that solution.

Any reduction in the proposed GRIs and PSS’s? Not yet. The below is a list of proposed (and in the case of September 1 GRI already implemented) General Rate Increases and Peak Season Surcharges:

Our priority as we navigate this unprecedented situation, is to keep your cargo flowing as quickly and as seamlessly as possible, given the current conditions – and to communicate effectively along the way. We will get through this together.